AGL says it will build a grid-scale battery on Adelaide's Torrens Island.

The company says the facility will eventually have a capacity of up to 250 megawatts, after being built in stages.

AGL chief executive officer and managing director Brett Redman says it will play a role in South Australia's energy generation, helping to balance out swings in power generation because of wind and solar power.

AGL already has two gas-powered power stations on Torrens Island.

“This battery is another step in the state's energy transition, while at the same time allowing a rapid response to changes in renewable generation when our customers and communities need it,” he said.

State Energy Minister Dan van Holst Pellekaan has welcomed the stability provided by the batteries.

“What they're really most helpful for is pumping massive amounts of electricity within milliseconds into the grid, or the opposite — sucking it out — and that helps control the flow of electricity in the grid,” Mr van Holst Pellekaan said.

AGL does not have a date for completing the Torrens Island battery but it has been exempted from required planning approval for battery developments in order to speed up the project.